Friday, July 29, 2011

Reading for the weekend

This week I was profiled at Asking About Money.  I answered ten questions about my relationship with money so check out the profile to see my answers.  Asking About Money is totally new and I'm very excited to see where it goes.  The idea is to compile a lot of answers to the same question so you can see how people like you have dealt with similar issues.  They're looking for profiles so contact them if you'd like to join the fun!

In the last week I had a few guest posts:
And the big surprise of the week was my guest post on paying cash for my MBA which got published at Money Saving Mom without a word.  I didn't know that it was even being considered, much less going to be published, until my traffic spiked!  

So if you're a new reader from Money Saving Mom or any of these other sites, welcome and thanks for sticking around!  You can subscribe to posts via email or RSS using the links in the upper right of the website.  You can also get updates through Twitter and Facebook

This week I was also featured in the Totally Money blog carnival at Family Money Values for my post on Handling Money as a Couple and was included in the Festival of Frugality at Parenting Family Money for my Eat Slower, Spend Slower! post.Finally, I was included in the Carnival of Personal Finance at Dealerity for Luxuries on a Small Budget.

If that's not enough reading for you than check out the carnivals for more ;)

Thursday, July 28, 2011

The full cost of attending a wedding

There's plenty of talk about how much it costs to put on a wedding (hint: think five figures) and how the bridal/wedding industry is out of control with extra services, expenses and markups.  But I'm not getting married this summer so let's talk about how expensive it is to be a guest at one of these weddings.  Now don't get me wrong, it's great fun and a privilege to be invited to and attend the wedding of good friends or family tying the knot, but it's pricey! Call me cheap, sure, but think about the total cost:
  • Card - $5
  • Clothes - $0-$200 depending on what's in your wardrobe
  • Gift - $50-$150 is what I'm seeing these days
  • Wrapping for the gift - $10
  • Hotel - $100-$300 per night if it's not local
  • Transportation $20-$1000 plane tickets for a destination wedding or a cab/parking for a local one
So you're looking at a minimum of $75 if you're cheap and your hosts are too to $2,000 or more.  We attended a wedding last weekend with a total cost to us of $375.  Ouch! That's half a month's rent for us! 

Have you been to a wedding this summer?  How much did it cost you?  Are you paying for a wedding?  Tell me that my costs are miniscule or how you're saving your guests money!

    Wednesday, July 27, 2011

    How I cut the cost of college

    The cost of college is becoming exorbitant and its growth has outpaced inflation significantly for the last several years.   I graduated from college without any student loans, helped largely in part by my parents' prudent savings.  However, I also helped defray costs significantly.  Here are nine ways I cut expenses and boosted income while in college to make it more affordable:
    1.  Resident assistant - I held study breaks and let students into their rooms when they got locked out.  In exchange the college gave me a room in the dorms for free.
    2. Full tuition scholarship - Mine was merit based.  Don't underestimate the power of top-notch SAT and GPA stats.  Others may be need-based.
    3. Comparison shopped for textbooks and sold them afterwards - I think during my four years of college I might have bought a new textbook twice since they were brand new editions.  I used a textbook price aggregator like bigwords.com to shop around both when buying my textbooks and in selling them when I was done.  Amazon's fulfilled by Amazon program made selling a pile of textbooks easy. 
    4. Technical major - In my unscientific survey, engineering, computer science, and hard science majors tend to get more scholarship money.  There are tons of merit and need-based scholarships out there that target "STEM" (science, technology, engineering, mathematics) majors.
    5. Landed an additional scholarship - Even after tuition is covered you still have room, board, books, and other living expenses to cover.  My additional scholarship allowed me to keep any leftover money as taxable income.  This allowed me to graduate with a nest egg that was a little bigger.  A big plus compared to graduating with student loans.
    6. National Merit - Just take the PSAT and score high and you might qualify to become a National Merit Scholar.  Many schools automatically give these kids scholarships.  Mine didn't but I received offers from other schools of anything from $1,000 per year to full cost of attendance just for scoring well on a test.
    7. Worked summers - I got a job in my field every summer during college and worked full-time for every week of the summer break except maybe two. I earned more than enough money to cover my expenses for the summer and saved the rest.  More importantly, I gained valuable experience in my field and had a much more dense resume than many of my peers when I graduated.
    8. Worked during school - By working part time in my field during school, I gained more experience, covered all incidentals and textbooks, plus saved some.
    9. Kept expenses low - As always, I didn't spend extravagantly while in college.  I either had a tight budget or was paying for expenses out of pocket so partying, eating out, and bars were limited.
    I'm sure there are plenty of other ways out there.  What did you do you cut the cost of college?

      Tuesday, July 26, 2011

      Do I need an emergency fund?

      Right now my best estimates put me within striking distance of being able to achieve my goal over the next two years.  There are some big assumptions in there: a budget of $800/month living expenses, working full time until school starts and successfully getting paid at the same withholding rate as my last check, not owing a big tax bill, my school doesn't reduce my financial aid and that I'll get a paying internship next summer that pays about average for my school. With all of those assumptions plugged in, I'll be $100 short of meeting my goal.  That number isn't at all meaningful, of course, aside from telling me that it's possible to meet my goal but it'll be close, because there are so many assumptions playing into it at this point.

      But that $100 gap assumes I use all of my liquid savings and 529 balance. In other words, my checking account would be empty, I'd have no non-retirement savings and no buffer and I'd be about $100 short just before graduation.  I'm actually really happy with that answer right now; it's way closer than I thought I would get when I originally set my goal.  However, now I'm wondering how close I can actually cut it.

      I've never had a true emergency fund, per se, but I've always had enough liquid savings on hand to cover a new (to me) car, a year's worth of living expenses or more.  Now all of that has been earmarked for tuition, living expenses and so on and will very rapidly disappear.  This year I'm less concerned for;  I have enough in cash right now to pay all my living expenses plus a six-month buffer even after paying for my tuition, fees and supplies.  That buffer will, hopefully, grow through the end of this summer as I continue to work and be paid.

      Next year, however, is a different story.  From my best estimates, I'll pay my business school bills and have just enough left over to cover expected living expenses and not a dime more.  No emergency fund, no slush fund of savings, nothing.  So I'm wondering how I should approach this and thought it would be better to come up with some strategies now, while I still have savings and options, rather than later when I'm already down to minimal to meet expenses.

      I do have a few options, but I'm not sure which is best:
      1. Wing it - It's in the future, I have family, friends and a SO who can help me out and who knows what will happen between now and then (This option terrifies me more than a little. Neurotic planner, who me?)
      2. Loans - I could accept enough loans to constitute an acceptable emergency fund but not take distributions unless I'm in a real bind.  
      3. Roth IRA - I have about two years worth of living expenses in a roth IRA that I'm currently planning not to touch.  I'd like to avoid dipping into them since you can't put the contributions back later.
      4. Something else?  - I currently have no plans to work, I could set up a formal loan arrangement with an interest rate with my SO, or some other plan.  You guys have any ideas?
       So I'm looking for any feedback or ideas for all you smart readers and bloggers out there on how to approach this.  I'm kind of drawing blanks on how to decide.

      Of course I also need to figure out what size of emergency fund is appropriate for my situation.  Here are some factors:
      1. I have good health insurance
      2. I'm not planning on making money while in school, though I might take a job if it was a good fit
      3. I won't have dental dental insurance 
      4. My SO will continue to work and has a separate and large savings slush fund, but we maintain separate finances and I would like to do this on my own.
      5. Cash on hand when I apply for financial aid again this spring might ding my financial aid for next year
      6. My fixed costs are very low once the business school bills are paid.  Rent is $400 plus utilities and groceries are $12.50 a week for my share and that's about it.  (Thank you mom and dad for the family cell phone plan and car insurance.)  Realistically irregular expenses and utilities will keep my minimum spending above $500 a month but I might be able to get down to $600 in a crunch situation.
       So, all my wonderful personal finance gurus and amazingly opinionated readers, tell me what I should do!

      Monday, July 25, 2011

      When buying in bulk doesn't make sense

      Buying in bulk is often a great way to cut the unit price of whatever it is your buying, groceries especially.  It's a tactic we use in our $25 grocery budget and makes even more sense when their are more than two of you in the house.  We buy things like toilet paper in bulk since I know we'll use it eventually and it doesn't spoil.  However, there are several drawbacks when buying in bulk and sometimes it just doesn't make sense.
      • The food spoils before you can eat it all
      • You won't use everything you've bought
      • It disrupts your cash flow or you can't afford the larger quantity
      • You buy and use more than you would have if you hadn't bought in bulk
      • Buying in bulk isn't actually cheaper or is more expensive per unit than buying individual items
      • You have no place to store it
      It's important to consider all of these pitfalls when you consider buying in bulk and these are some of the reasons why we only buy large quantities of a few key staples that keep well.

      Do you buy any of your groceries in bulk?  In what other areas has buying in bulk produced savings for you?

        Saturday, July 23, 2011

        Reading for the weekend

        If it's scorching hot where you are then stay inside and get some great reading done this weekend.  Here's what I've been reading:
        This week I was included in both the Yakezie Carnival and the Festival of Frugality (editor's pick!) for my post on saving money through laziness.


        I also had two guest posts:

        Friday, July 22, 2011

        A quick, easy, and cheap dessert

        Since it's Friday and it's awfully hot in many parts of the country I thought I would share with you a no cook dessert we invented last night instead of a real post.

        We invented the dessert trifecta of perfection last night.  Something simple and easy to prepare, tasty, and we almost always have the cheap ingredients already on hand.  I really wanted ice cream or at least some kind of dessert last night, but hiking out to the store seemed a long and arduous journey.  I thought about making cookies instead, also too hard.  I thought about asking my SO to make me cookies, no luck.  So I had to get creative.  I invented (I'm taking credit though I bet I read about someone doing this and just can't remember) a delicious dessert simple and easy enough that I talked my SO into making it for me. 

        Since I am a generous genius I will be sharing the recipe with you.  Thanks can be sent in the form of checks, beer, or an ice cream delivery service.

        Peanut butter oat balls  
         (Anyone have a better name for these? Obviously my genious is only for inventing desserts and not naming them.)
         In order of importance (because we never actually measure anything when cooking):
        1. Sugar
        2. Peanut butter
        3. Oats
        Sugar is the most important ingredient because this is dessert, duh,  peanut butter comes first in the dessert's name so that's next, and  finally oats because they're mainly there for texture.  If you're a texture person please feel free to swap items 2 and 3.

        Okay, so let's do some lazy math since we're making a lazy dessert.  Ice cream, my original craving, costs between $2 and $7 at our local grocery store depending on brand, sales, and size.  This recipe cost us roughly $1 for all the ingredients.  Luckily my SO's labor is free.  I will also make the completely unsubstantiated claim that my genius dessert is healthier than ice cream.  If you use the peanuts and salt version of peanut butter, which my SO is addicted to, you will find that you can even pronounce all four of the ingredients with a second grade reading level. 

        Okay, on to the steps.
        1. Put ingredients in a bowl
        2. Mix
        3. Sample
        4. Add more of something
        5. Mix
        6. Sample
        7. Repeat until delicious or full, hopefully the former first and the latter second
        8. Roll into balls to eat by hand or eat with your mixing fork straight out of the bowl
        What are your lazy meals or desserts?  I'll admit to a fondness for chocolate Jello pudding which I'll occasionally buy a box of mix for (the store brand stuff doesn't compare, it doesn't set up right.  One of the few generics I've been truly disappointed in).  What's yours?

        Thursday, July 21, 2011

        Luxuries on a small budget

        As I've mentioned before, I'm on a tight budget trying to pay for my MBA in cash.  However, I don't usually feel deprived on my budget because all my basic needs are met and I have a little wiggle room for small indulgences each week.  I use that wiggle room to hit some of the occasional cravings I have and to feel self indulgent while still keeping my budget intact.  I find if I'm proactive with this and am a little looser with small purchases I never find myself with a hundred dollar or more spending spree.  Here are some of my luxuries:
        • Small plates - We turn clearing out the fridge into something fun instead of dreaded by making a few small plates out of the leftovers.  Artfully presented and with a little extra sprucing up it's not a problem to finish what's left.
        • Fresh herbs - We lucked out with a neighbor who loves to garden but can't keep up with the enormous container garden she's created with herbs.  So we've been welcomed to take a few snips here and there just to keep things tidy.  Fresh herbs can make any meal feel a lot nicer or fancier than it might otherwise feel.
        • Call your food fancy names - I don't do this literally.  I would have had a hard time keeping a straight telling my SO that last night's dinner was going to be "herb encrusted roasted eggplant over a bed of fettuccine with an olive oil garlic sauce" since it was eggplant we got as a steal but was going bad in our fridge that I threw on the grill, neglected to put enough marinade on, and later added whatever looked good in the herb garden, garlic powder, and extra olive oil with on top of the pasta we had on hand.  But it was pretty good and it's better than many meals we've had out.  I try to give myself credit where credit is due and feel good about what I put on the table so sometimes my SO and I will come up with the restaurant name for what we've just made.  It's entertaining and reminds us that we really do eat well.
        • Buying what I want - On occasion I make sure to satisfy a craving.  Most nights when I want dessert I'll ignore the feeling, but sometimes I'll go out to a store near us which sells small chocolates for $.25 each and buy two.  The walk is good for me and the serving size makes it hard to overindulge in cost or consumption.  
        • A mug of something hot - Coffee with milk or tea with sugar and mint feels like manna from heaven on a cold winter day or when you're a little sleep deprived. Giving myself the space to sip from a mug without stress or distraction until I'm done feels very civilized and wealthy.  I actually don't get the same level of calm or enjoyment at a coffee shop that I do at home since Starbucks and the like tend to be busy, loud, and have terrible taste in music. 
        • Doing something cliche - A typical dinner and a movie date can run you over $50 after tickets and without even ordering wine with dinner.  Instead, we opt for romantic cliches like long walks holding hands, picnics in the park, watching the sun set over the water, or splitting an ice cream cone together. 
        • Trying something new - We found pluots on sale 8 for $1 and bought them to have something new to try.  (For those of you not in the know, a pluot is a plum apricot hybrid) They replaced our usual apple, orange, banana or strawberry mix for the week and helped make things feel fresh.
        • Letting something go to waste - This isn't the best advice, but being able to just hand wave and let something go to waste without worrying makes me feel like Marie Antoinette, completely isolated from financial reality.  Those pluots we bought?  They were okay, but after six I was sick of them.  When I found the other two in the back of the fridge a week later into the trash they went without regret.  At $.25, it was a small price to pay to feel rich.
        • Being lazy - Cutting myself a break in other areas helps my overall stress level and makes me feel self indulgent without spending any money.  So if I don't want to do dishes one night and feel worn out, I won't do dishes.  They can wait until the morning.  Like everything else this isn't a regular habit but an occasional indulgence.  Usually in the morning after a good night's sleep I'll tackle them without a problem. Plus I've found that being lazy can save me money.
        What are some of your frugal indulgences?

        Wednesday, July 20, 2011

        Handling money as a couple

        My SO and I have been living together for a few years now and we've got money management pretty much figured out.  Like most couples we don't agree on everything, but we never really fight about money.  Instead of shouting matches when the credit card bills come in, we have discussions about financial priorities, goals and implementation on a regular basis or when one person feels things are out of whack.

        Each of us has kept our own accounts and we have yet to open a joint account except for a shared business venture.  We split joint expenses down the middle and keep track of who pays what through Mint and a spreadsheet.  This allows us to correct when one person has been paying for things more often than the other and it allows us to track spending for things like groceries that would be irregularly split between both of us.  Our incomes have been in the same ballpark and our long-term earning potential is similar so a 50-50 split has seemed the fair option.  When I want beer and my SO doesn't, I pay, no split.  The reverse is true if my SO wants coffee.

        Adding to our individual Mint accounts, we have a joint Mint account which has all of our credit cards, retirement savings, and bank accounts added.  This enables each person to see the bigger, joint picture for goals like retirement or spending and to have read-only access to the others finances.  I really like the joint Mint account because it gives us really good transparency and builds trust while allowing us to maintain independence.

        In general we are fortunate to be fairly similar in our financial goals, propensity to save, and spending habits.  My SO lives in the now more than I do, but it's an excellent balance to my need to plan and control.  In reverse, I'm much better at paperwork and minutia so when I make my roth IRA contribution each year or rebalance my 401k I mention it to my SO.  When we were looking to buy a house both names went on the mortgage and the down payment would have been split evenly along with the monthly payments.  The paperwork, research, house hunting and so on also all got split down the middle except for when I was out of the country on business.  (Yes,  I did that twice just after we'd decided to put in an offer on two different houses. To my SO, you're the best ever.)

        What's your system for managing money with your significant other?  Does it work well for you?

        Tuesday, July 19, 2011

        Blog feedback!

        So this blog is now three months old and it's getting regular traffic.  I'm pumped to have people reading and interacting here.  It's super cool to know that someone's benefiting from my experience and from your comments, emails and tweets I'm certainly benefiting from yours.  So first I want to thank you, all of you, for reading and interacting with me.  It's been a great source of inspiration to me the last several months and I'm sure it will help me stay motivated over the next two years since I'll be accountable to all of you for my progress on my goal to graduate debt free.

        Since you all are helping me so much I'd like to hear how I can better help you.  Is there something you'd like to read about?  Something that's clunky with the website, writing or topics? Sound off in the comments or by email at nodebtmba@nodebtmba.com.  Any and all feedback is appreciated as are blog post ideas (I need to make sure I have a bigger back log before the craziness of school sets in).

        Monday, July 18, 2011

        But don't take my word for it.... Student loans

        There's a lot of student loan bashing here on the blog.  My personal pet-peeve is calling student loans an investment.  Hint: they aren't, the degree is.  My goal is to graduate with my MBA debt-free from business school and I've committed myself to two years of dogged avoidance of student loans.  So things here might be a little bit slanted. Because, clearly, I only maybe have an opinion.  Honestly, it's not all bad, I'm just saying that if you can avoid student loans do so and carefully evaluate the ROI and risks in your plan before committing yourself to an expensive degree.

        But I thought it might be time to gather some outside opinions.  So without further ado, the round up is below so you don't have to take my word on student loans.
         How do you feel about student loans?  What contributed to your views on them?

        Saturday, July 16, 2011

        Weekend Links

        This weekend is set to be as packed as the week was,  but it's all fun or productive so I can't complain.  What are your plans for the weekend?

        Here are some links this week that I found interesting:

        I also had a guest post over at Squirrelers this week, 7 Strategies for Saving More Money. Thanks to them for having me!

          Friday, July 15, 2011

          First year in cash!!!

          So I have some good news.  I recently received the official bill for my first semester at business school and assuming that the spring bill is the same I will be paying for the entirety of my first year bill in CASH! I sort of knew this was coming but didn't want to announce it until my aid was on my bill and credited.  Forgive me if I'm a little cautious when someone's offering me $34,500.

          So the official bill came and I can just write a check for it which is pretty awesome.  Plus I'll have enough to cover living expenses for the year and, if I stick to a budget, as of my bank balances right now I'll have $6,000 left over for next year plus I won't have touched my 529 or retirement accounts.  I'm also expecting to have a few more paychecks coming in from my job before I quit to start school (don't worry my boss is in on it).

          Though my ability to pay in cash wasn't decided by this, I got very lucky recently when my parents discovered that the 529 they'd started for me to pay for undergrad wasn't empty.  There was left over money in it because of the scholarships I received while in school, but for years we all thought it was on the order of a few hundred dollars.  Well I asked them to call and check the balance and billing method so I could apply what little there was to my tuition bill and my mom got a surprise.  There's actually $4,000 left in my undergrad 529.  This money will pay for a portion of my tuition this fall and will give me a boost in how much I have saved for living expenses and my second year of business school.

          I am so lucky to have parents who saved for my college education and I was so fortunate to receive scholarships and work opportunities to defray the costs for them.  It's a very pleasant surprise to find these efforts are still paying dividends!  I'm also lucky to have a boss and workplace that is supportive of my plans for graduate school and have accommodated my requests for an end date close to when school starts.  This arrangement allows me great lead time to hand off all the projects I'm currently working on and allows me to put away as much cash as possible for the coming lean income period ;)

          So I'm incredibly happy that in the next week or so I'll be writing the check that will put me a good chunk of the way towards meeting my goal of graduating debt free.   I was wondering if it would be fun to have a progress bar on the blog?  I like seeing them on other blogs and I could update mine by knocking off living expenses from the student budget each month and making big progress when I pay a bill from school.  However, it might be a bit deceptive since I plan to live on less than the student budget and I'm receiving a good chunk of aid. Thoughts?

          Also, YAY!

          Thursday, July 14, 2011

          Dress to impress gone too far?

          We've all been told the advice of dressing for the job you want instead of the job you have.  But is it possible to take this advice too far?  Many career websites will suggest dressing like your boss or two steps above your position and mimicking the dress code of the office as a whole, but what happens when you exceed that dress code?

          Let me lay out a situation.  At one or two of the offices I've worked in I've found, very unscientifically, that the assistants and secretaries dress much nicer than their bosses do.  These people are mostly young and women and come into work dressed professionally, but much more fashionably and a little more formal than their bosses.  Outfits might be a matching suit with heels, jewlery and make up or a skirt and heels outfit that looks like it might be out of a fashion magazine.  Their bosses wear dress shirts and slacks mostly and the clothes are older, more conservative, less stylish, and less likely to perfectly match.  The managers are also less likely to wear make up and jewelery. There are female and male managers and the trend seems to hold true for both.

          I have a few ideas on why this might be that are complete conjecture:
          1. The assistants have heard the advice to dress your best at work 
          2. The assistants have more recently entered the workforce and as such have purchased more modern and new clothes
          3. The assistants have more time to shop than the managers do
          4. Managers feel more secure in their positions so they don't spend as much time on appearances
          5. Managers might have more substantive assessments around performance rather than no assessments or subjective ones for assistants
          6. Assistants are a group of people with different goals/values than managers or the professionals they manage; they are more interested in shopping and less interested in career progression (the difference in dress holds true between non-managerial professionals and assistants, though it is less stark)
           Some of those ideas are pretty weak.  Do you think any of them hold water?

          I'm curious as to the impact dressing very well has on these assistants' careers.  Many of them are similar in age to me and dress better much better, but have significantly fewer and less important responsibilities.  I know we don't take people who dress very poorly seriously in the workplace, but maybe the same could be said if someone dresses significantly better than the norm?  I feel like it would be very dependent on context. The funny part is that the assistants are the ones in our office that can least afford to buy clothes yet the seem to have the most and the newest.

          What has been your experience with people who dress better than their bosses?  Does this phenomenon exist in your workplace?  How does it affect career progression?

          Wednesday, July 13, 2011

          MBA earnings, cost, and debt

          If you're reading this in an RSS reader you may have to click through to see the graphs.  Email me or leave a comment if this is an issue for you so I can debug 

          Poets and Quants just posted some data on the long-term salaries and earnings of MBAs by school.  Conveniently, seven of the top eight school by 20 year earnings were the "top 5" schools I've called out.   So one might guess that there's a relationship between a school's rank and its students' earnings, which would be logical.

          But I'm less concerned about rankings and more interested in return on investment.  So I threw together some quick graphs that look at earnings against cost per year of the program and average student loan debt at graduation.  Do you see any trends?









          On all three of the earnings data points (Total earnings over 20 years, Median pay 20 years out and Median pay 10 years out), Harvard comes out on top.  Sometimes by a little, sometimes by a lot.  Stanford and Wharton are Harvard's closest competitors.  So congrats to all the Harvard folks out there, you're in the money.

          What also struck me though is that neither cost or average debt were significantly correlated with any of the earnings metrics. Debt correlated best with median pay 20 years out with an r^2 of .05, not linearly related at all, and was worse for the rest.  Total cost fit better with an r^2 of .6 for median pay 10 years out and around .2 for the two other earnings metrics.  But basically it's hard to say you get what you pay for with an MBA.  

          Instead, average ranking was a better fit with an r^2 of .6 for median pay 20 years out and .5 for pay 10 years out and earnings over 20 years.   

           
          Kellogg is a big exception here, but overall rankings may actually have some predictive value.  Better than I thought certainly.  So maybe I need to revise my idea that Harvard and Stanford are the best MBA deal and just go out and say Harvard is the best deal for an MBA.    Though the difference isn't as significant as it looks in these graphs since the scales have been changed to fit the data, on a scale from zero the differences would look a lot smaller.

          What do you think?  What trends do you see in this data?